Governments need to lead the breakthrough on technology

The Obama administration once again convened a Major Economies Forum in Italy this week after the G-8 meeting, which included the world’s 17 major carbon emitters, to press forward on a global deal on climate change and the transformation to a clean-energy economy. One of the most important announcements to come out of this meeting is the formation of a formal “Global Partnership” on “low-carbon, climate-friendly technologies.” This program aims to double the current commitments on technology assistance by 2015 and sets a deadline for mapping actions for achieving a range of important goals on this cluster of issues by November 15, 2009.

Achieving success in this program could potentially be key for engaging the major emitting developing economies, such as China and India, on accepting meaningful measures for reducing their carbon emissions. Such assurances are necessary for negotiating a successful new international treaty responding to climate change this December at the U.N. climate change meeting in Copenhagen. The countries composing the Major Economies Forum have, with this movement, recognized that the struggle against climate change will not be won without a revolution in the use of existing, low-carbon technology and a tidal wave of new inventions.

The Center for American Progress, working jointly with eight other progressive think tanks from around the world in our Global Climate Network, today launches a report, “Breaking Through on Technology,” to help to pave the way for a successful global deal on the transfer of clean-energy technology. Together with our partners in India, China, Brazil, South Africa, Nigeria, Germany, Australia, and the United Kingdom, we think a new focus on technology will not only help to avert a climate crisis, but also transform the ongoing international negotiations into a forum focusing on shared opportunities rather than arguments over historically differentiated carbon emissions.

Our research involved speaking to more than 100 leading business people, government officials, and academics in eight countries: Australia, Brazil, China, Germany, India, Nigeria, South Africa, and the United States. We reached three key conclusions through these discussions, which leaders should consider in enacting the new technology partnership mandate of the Major Economies Forum.

First, we argue, as the Intergovernmental Panel on Climate Change also said, that a low-carbon technology revolution will not simply happen—it requires government intervention. Our research demonstrates that one of the major barriers to low-carbon technology is the lack of coherent policy at the domestic level in both industrialized and developing countries.

Conventional wisdom points to the importance of establishing economy-wide programs to price carbon emissions through taxation or trading, such as the cap-and-trade program passed recently by the House of Representatives as part of the American Clean Energy and Security Act. This may indeed help low-carbon technology over the longer term, especially when innovations are more firmly established.

But right now more keenly targeted government policies are urgently needed, particularly because many of the barriers have to do with a lack of skills and know-how, including knowledge of how to make good policy, as well as the availability of technology. Such policies might include phasing in carbon standards for specific products or sectors, providing tax incentives to drive investment in low-carbon energy, and generally creating stable investment climates and supporting the research, development, and deployment of new technologies.

The need for finance is the second conclusion of this study. Almost all of those interviewed identified the lack of upfront finance and financial mechanisms to help meet the higher costs of deploying new technology rapidly as being a major barrier to low-carbon technology. The private sector should become the major source of low-carbon finance, but government money is needed early on to make new technologies cheaper and less risky. We at CAP advocated the establishment of a new national green bank to help achieve this outcome within the legislative architecture of the American Clean Energy and Security Act.

But beyond this domestic initiative we suggest that an international framework for reducing emissions should contain a mechanism to reward robust, comprehensive policymaking at the national level with new finance. Developed countries have an obligation under the existing U.N. climate agreement to be the major contributors to this effort.

Third, we call for an international technologies initiative, which could help accelerate the collaborative development of new technology and realize the brightest and best ideas through the difficult demonstration stage to full commercial production and deployment. The so-called “valley of death” in which many great ideas perish for want of finance cannot be allowed to kill off important low-carbon innovations. We will argue for such an expanded function as part of the MEF’s Global Partnership on technology.

Again, many of the experts we consulted in our study highlighted the perilous state of research and development funding. We propose that governments, key academic institutions, and companies work together in regional hubs and under the umbrella of such a clean technology initiative to share equipment, know-how, and skills in an urgent drive to find the climate-saving technologies of the future, especially those that will also help bring energy services to poor people.

Some will balk at the suggestion that government should have such a strong role in driving new, low-carbon technology. And yet our study shows that while there are some differences of view among public servants, politicians, and people in the private sector, the overwhelming conclusion is that governments have to steer the low-carbon technology revolution, and do so with more purpose than has hitherto been the case.

Cooperating on technology will not be easy; the bailing out of banks and resuscitation of economies has led to large fiscal deficits in some countries, even if some of the money has helped deploy low-carbon technology. But our message in this research is clear: put technology at the heart of negotiations; agree on an international mechanism that rewards robust low-carbon development strategies; pool resources to plough into research, development, and project demonstration; focus on know-how as much as equipment; share knowledge across borders; and propagate skills.

Success at Copenhagen in December depends on reaching consensus in each critical area currently under negotiation. A clear commitment by developed countries to support robust, internationally approved, national plans with new finance and agreement and a commitment to make the new MEF initiative on technology successful could lay the foundations for the low-carbon revolution we need.